Why Digital Experience Matters

Customer experience in a key source of competitive differentiation in the digital economy. As new competitors and business models change an industry, established companies can adopt customer experience as a primary source of differentiation in the market. Because digital transformation goes beyond technology and product development into business model change, customer experience must play a central role for every digital business.

Transcript

In the last five years or so, most companies have realized they can no longer compete on price or functionality, and so experience has become one of the primary ways to differentiate your offering.

The most common example that we know is the Apple iPod. It may not have been the best or even the least expensive mp3 player where it reached the market, but the experience with iTunes made it the most popular.

In fact, it fundamentally changed the music industry from being based on albums to based on a song. Customer experience became a boardroom issue.

I think we’re now entering a second phase, where we’re not just changing the experience, we’re changing the business model.

This is harder because this means it has to change how you make money, and it forces you to change the core of who you are. You have to fundamentally transform in a digital way.

In music, this isn’t about buying songs or buying an album, but rather about paying access to a music catalog. Think for example about Spotify; you’re paying for example $10 a month to get access to music. When you stop paying, you have nothing. That’s a business transformation, and one could argue the reason that the King of Experience, Apple, launched Apple music-- a business transformation.

Now this is a key boardroom topic as well, and everyone is asking themselves, ‘How do I Uber myself?’ That is why digital transformation is such a critical and important topic these days.

In the last five years or so, most companies have realized they can no longer compete on price or functionality, and so experience has become one of the primary ways to differentiate your offering.

The most common example that we know is the Apple iPod. It may not have been the best or even the least expensive mp3 player where it reached the market, but the experience with iTunes made it the most popular.

In fact, it fundamentally changed the music industry from being based on albums to based on a song. Customer experience became a boardroom issue.

I think we’re now entering a second phase, where we’re not just changing the experience, we’re changing the business model.

This is harder because this means it has to change how you make money, and it forces you to change the core of who you are. You have to fundamentally transform in a digital way.

In music, this isn’t about buying songs or buying an album, but rather about paying access to a music catalog. Think for example about Spotify; you’re paying for example $10 a month to get access to music. When you stop paying, you have nothing. That’s a business transformation, and one could argue the reason that the King of Experience, Apple, launched Apple music-- a business transformation.

Now this is a key boardroom topic as well, and everyone is asking themselves, ‘How do I Uber myself?’ That is why digital transformation is such a critical and important topic these days.

How do platforms, data, and the internet of things come together create innovation in the enterprise? In this episode, Quentin Clark, Chief Business Officer at SAP shares his view on technologies that can drive transformation and business model innovation.

Modern organizations must consider their relationship to customers, including the possible universe of digital touch points. Although analyzing customer experience with journey maps offers a traditional approach, we should evaluate whether this method is sufficient for today's digital enterprise.

Jonathan Becher is the Chief Digital Officer of SAP. Previously, he was CEO at companies such as NeoVista Software, Accrue Software and Pilot Software. He holds a Master's degree in Computer Science from Duke University.